Annaly Capital: Set To Rise From Falling Rates (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Annaly Capital Management has been hit hard by rising interest rates as this has caused net interest margins and ultimately book value per share to fall.
• Management has placed hedges to position the company for an end to the rate hiking cycle, and has managed to gain market share in key segments amid a challenging environment.
• Now, Annaly is expected to benefit from potential rate cuts, leading to a revival in net interest income yields and increased activity in the agency mortgage-backed security business.
• Annaly is trading at fair P/B multiples. I believe upside can come from upticks in book value per share.
• Besides the Fed's interest rate decisions, mortgage prepayment rates are a key risk to watch out for as this may increase as rates fall.

Read the full article here.